Buy to let debt dragging down professionals

The company, which has just published its latest (March 2010) data, reported a 53% leap in distressed buy-to-let investors struggling to pay their creditors.

Typical debts ranged from £163,000 to £201,000 – in all reported cases those saddled with the property debt were middle class professionals owing substantial mortgage arrears.

“We have seen a near melt down in the buy-to-let market, with a combination of rental arrears caused mainly by tenants losing their jobs, void periods and high fixed rate mortgages causing serious problems,” said IVA.com director Terry Balfour.

Recent figures from the Council of Mortgage Lenders show that arrears are down 37% year on year, with the number of repossessed in the final quarter of 2009 also down by 25%, as many landlords started to benefit from reduced interest rates.

“While it is encouraging to see that the total number of buy-to-let repossessions remain a relatively small percentage of the market, our experience is that when landlords do get into trouble, the debt levels become very unmanageable,” added Balfour. “Our biggest debt cases are currently solicitors – again, in the buy to let market – which just goes to show that even the professionals can get it seriously wrong,” he said.